Is the Daily Mail right about immigrants?

Unskilled migrants depress the wages of unskilled natives. But if we allow entry only to the highly

Mass immigration will be among the most urgent issues facing rich countries this year. They will deal with it by becoming more restrictive, and much more choosy about whom they allow in to their countries. This is inevitable, given the political trends in the past year; it may also be desirable, on certain conditions.

It became obvious in 2002 that a significant proportion of European electorates could be roused to hostility against what they perceived as mass immigration. It is too simple to call this intolerance or racism, let alone neo-fascism. The acceptance and integration of non-white Europeans has gone on at the same time and in the same societies as hostility to immigration has increased.

But the direction of public feeling is unmistakable. No politician who aspires to power can ignore it; the challenge for those who wish to retain a liberal polity, and also to gain public support for increased assistance to the world's poor, is to frame policies that will undercut the appeal of the populist right.

In Austria, the anti-immigrant Freedom Party collapsed in recent elections. The standing of the anti-immigrant List Pim Fortuyn in the Netherlands has also plummeted. But the fate of neither party allows liberal complacency. In both cases, the parties had failed to produce a leadership fit to exercise governmental responsibilities. The populist parties that have stayed out of government have on the whole retained their appeal. The Danish People's Party, the Norwegian Progress Party, the Vlaams Blok in Belgium and France's Front National all command significant swathes of the national electorates. Italy is the exception - in the sense that the government of the right is as a whole strongly anti-immigrant, the running being made by the smaller members of the Casa delle Liberta coali-tion: the Lega Nord and the Alleanza Nazionale.

Opinion polls consistently show that hostility to immigration is greatest among those most immediately affected - the native poor and low-skilled. This reflects an uncomfortable truth - that immigration is good for the wealthier classes and bad for the poorer - which is not much discussed in Europe, where people tend to quote old research showing that immigration is always economically healthy.

In the US, however, George Borjas, a Harvard professor of public policy and himself the son of Cuban immigrants, is among those who has focused attention on research into US immigration of the past two decades. This ran at roughly 800,000 a year legally and an estimated 300,000 illegally, and it tended to be lower-skilled than in previous decades, and thus to depress wage levels at the lower end. Immigration, the research shows, accounted for as much as one-third of the decline in wages for less-skilled and less-educated natives. At the same time, the lower-skilled status of immigrant families made them a larger burden on social services than previous immigrants, thus further restricting resources for low-paid natives.

Immigration does still have a net beneficial effect on the economy - it tends to increase the size of the overall economic "pie". But only just. Borjas estimates that lower-skilled native workers lose about $133bn a year while the gains to the economy, largely from the efficiency of hiring low-paid immigrant labour in everything from packing plants to household service, is around $140bn a year. The gain accrues mainly to the rich and the pain mainly to the low-skilled workers - themselves often minorities, disproportionately black.

Similar research in Europe tends to support the US findings. A 2001 Home Office study showed that "migration increases the supply of labour [and] this is likely, in theory, to reduce wages for workers competing with migrants, and increase returns to capital and other factors complementary to migrant labour". Professor Richard Layard, the LSE economist who designed Labour's welfare-to-work programme, wrote in a letter to the Financial Times that "for unskilled Europeans, [immigration] is a mixed blessing. It depresses their wages and may affect their job opportunities. Already unskilled workers are four times more likely to be unemployed than skilled workers, and it is not surprising they worry . . . it is not helpful to say: 'Europe needs unskilled immigration', as if all the Europeans were the same. We need to allow for the different interests at stake."

Moreover, the view that the affluent European countries need mass immigration to offset the effects of an ageing native population is coming under increasing challenge. The Times journalist Anthony Browne, in a pamphlet (Do We Need Mass Migration?) published by the think-tank Civitas, points out that "immigrants grow old, too". He argues that "for the UK, which is very densely populated, where overcrowding holds back economic growth, where the population is still naturally growing of its own accord, where the workforce is growing, where there is a housing crisis and where public services are desperately overstretched, then the ideal level of net immigration is either zero or modestly negative".

In a pamphlet (Welcome to the Asylum) for the Centre for Policy Studies, the writer Harriet Sergeant pointed out that illegal immigrants are at the mercy of the gangs that organise the migration and, if they are "lucky" enough to make it to an affluent society, must live insecurely in makeshift camps. "The absence of policy," she wrote, "the absence of any responsible, proactive and explicit decision about whom it is we can and will admit has not only fuelled racially bigoted resentment but created a vast criminal industry of people traffickers who prey on immigration and spread corruption. Thus money talks and fairness has no place. Humanity does not even enter into it."

The complicating factor in this debate is the "war on terror". Those who are suspected or convicted of presenting a terrorist threat to the west are overwhelmingly from the Middle East and from Pakistan. The small minority of (mainly youthful) celebrants within the western states of the massacre at the World Trade Center were from the Muslim communities. Some young western Muslims live much of their lives in what the journalist Yasmin Alibhai-Brown calls "virtual Islam" - surfing websites that emphasise the militant rejection of western values and secularism. To have centres of enmity and hatred within western countries, even if they never develop into full-scale terrorism, threatens to alienate all sections of society from the growing Muslim minority communities.

These themes will become more and more salient in the media in the year ahead. Towards the end of last year, the incoherence of immigration policy and the growth in immigrant numbers - charted and highlighted by such organisations as Migration Watch UK - became major media issues, even after the hot spot of the Sangatte refugee camp near Calais had been cooled by agreement between the British and French governments. The lead is taken by papers of the right, such as the Daily Mail, but it will not be confined to them if the problem grows.

No easy solution presents itself. The Canadian model is much admired - because the country has succeeded in bringing in a high number of immigrants (300,000 a year) and copes well with them, producing what seems to be a contented and genuinely multicultural society. But Canada is a vast and empty country, and it has a tradition of multiculturalism because of nearly 200 years of compromise between the British and French communities. Most important of all, it is strictly choosy about whom it allows in. Relatively wealthy immigrants who can produce $250,000 to start a new business are admitted almost automatically; unskilled immigrants are excluded almost as automatically. Canada, like Australia, goes for the skilled and the highly educated, and that partly explains why its growth rates are above the western average.

It is this lesson that we in Europe will take. We will increasingly limit immigration to the skilled and the economically active; and increasingly try to screen out the unskilled and the elderly. Our societies are too crowded and the native unskilled workers too large a constituency to allow anything else.

This is consistent with liberal ideals only if it is coupled with the recognition that such a policy denudes many poor countries of their brightest and best. Think of our own resentment of the brain drains to North America and think then of how much greater an effect an exodus of doctors, nurses, teachers and other professionals must have on African and other poor states. What those states need, if we will not take significant numbers of their low-skilled masses, is a policy that either compensates them for the supply of skilled labour or, better still, does far more to help make these societies attractive enough for the educated to stay. That implies, in turn, a greater involvement in the economic development of poor states than we have so far been willing to contemplate. But it is the only perspective within which a liberal migration policy can be framed, and can be eventually successful.